Service Out Of Jurisdiction - Utility And Forum Conveniens

Ace European Ltd & 5 Others v Howden Group Ltd and Howden North America Inc (2012)

Commercial Court, 17 September 20121

The English High Court held in this case that it would not blindly follow the reasoning of the Court's previous decision in Faraday Reinsurance Co Ltd v Howden [2011]2 when considering the utility of exercising jurisdiction over a claim for declaratory relief. Instead, the Court will apply the relevant principles in the context of the specific facts of each case. The declaratory relief sought must serve some useful purpose (utility) in order to justify the English court exercising jurisdiction.3

This judgment relates to an application brought by Howden North America, Inc. ("HNA", an engineering group supplying fans and gas cleaning equipment) to set aside an order granting the claimants (insurers subscribing to various layers of an excess public and product liability insurance programme) permission to serve out of the jurisdiction.

HNA faced personal injury claims in the U.S. alleging that HNA was responsible for exposure to asbestos products. HNA, in turn, brought claims against its insurers in federal court in Pennsylvania, which are ongoing. HNA joined the insurer claimants in this case to the Pennsylvania proceedings but the insurers sought a declaration from the English Court that: (i) the policies are governed by English law; and (ii) on a proper construction of the policies the insurers are not liable for asbestos-related claims where the third-party claimant had not suffered actionable personal injury or loss of or damage to material property which happens or occurs within the policy period or where a claim arising out of faulty materials was not made or notified within the policy period. The benefit for insurers of the policies being governed by English law as opposed to Pennsylvanian law is two-fold: (1) exposure to a hazardous condition does not trigger liability; and (2) the period clause is of fundamental importance and the relevant trigger must occur during the policy period.

In granting leave to serve out of the jurisdiction, the Court had applied well established general principles. HNA conceded for the purposes of its application to set aside that insurers had a good arguable case that the claims in respect of certain policies (which do not have an express English law or jurisdiction clause) fell within CPR Part 6.36 and paragraphs 3.1 (6)(a) (contract made within the jurisdiction) and (b) (contract...